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Despite Covid-19, 21 hotels still expected to open in Africa in 2020

Development sentiment remains optimistic among the majority of hotel owners in Africa. Pictured is Luanda in Angola. Picture: Supplied

Development sentiment remains optimistic among the majority of hotel owners in Africa. Pictured is Luanda in Angola. Picture: Supplied

Published Jul 6, 2020

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Hotels in Africa remain resilient despite unprecedented challenges. Wayne Troughton of HTI Consulting shared some positive news regarding the hotel sector in Africa during the first ‘Virtual Hotel Club’ held this month. 

The dynamic and informal Pan-African platform for hospitality industry stakeholders revealed what was in store for the industry at this time of Covid-19 crisis.The insights revealed, among others, that 21 projects, which will represent 2946 hotel rooms in 15 African countries, are still expected to open in 2020. 

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The data was gathered from a survey that covered 14 regional and international operators active in the African hotel space (41 hotel brands and 219 projects currently under development). These included the likes of Hilton Worldwide, Marriott International, Radisson Hotel Group and Accor Hotels, among others.

According to Troughton, while the African hospitality industry is facing extraordinary and unprecedented challenges and obstacles in light of the global pandemic, development sentiment remains optimistic among the majority (57 percent) of hotel owners as reported by operators on the continent.  

 

“Despite closures and significant performance declines, long-term investment fundamentals for the Sub-Saharan region remain positive despite significant short to mid-term challenges currently impacting the sector,” he said.

 

Troughton said of the total 219 hotel projects currently in Sub Saharan African pipeline, a large proportion (68 percent) of these projects are proceeding as planned, with only 18 percent currently on hold for a limited period, and 13 percent on hold indefinitely. 

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“Concerns among hotel owners are, of course, still apparent and, for several, a ‘wait and see’ approach relates to factors such as uncertainty around travel ban lifts in various markets, how to restore guest confidence and the impact of Covid-19 on hotel valuations. However, the optimism displayed by many owners generally relates to an understanding of the sector and adoption of a longer-term outlook,” he explained.

 

Outlook geared to opening doors

 

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Troughton said despite the current environment, construction related businesses in several countries resumed activity as early as possible after lockdowns eased.

“Encouragingly, this has resulted in 21 projects (representing 2946 hotel rooms in 15 African countries) still expected to open in 2020, with 52 percent of projects expecting short-term delays of three to six months.

“Longer term delays between nine to 12 months or beyond are typically being seen on those projects that were in earlier (or planning) phases of development,” he said.

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Troughton emphasised that these delays can generally be attributed to uncertainty around how long travel lockdowns will continue. However, around 30 percent of projects under construction don’t expect Covid-19 to cause any delays to their ongoing development. 

 

"Hotel owners are clearly taking a long-term investment outlook and are expecting Covid-19 to be largely neutralised prior to their hotels opening. This relates particularly to those in the early stages of planning," he added. 

 

Troughton said East Africa remained the region with the strongest hotel pipeline, followed by West and then Southern Africa.  East Africa has 88 branded hotels currently in the pipeline, followed by West Africa with 84 and Southern Africa with 47 hotels. 

Of the 21 hotels total projects expected to open doors in 2020, East Africa (40 percent of total supply), will see 1 134 rooms come on board, with the top cities being Antananarivo (22 percent), Dar es Salaam (20 percent) and Addis Ababa (20 percent).

 

West Africa (47 percent of total supply) sees 719 rooms planned to enter in 2020 across major cities including Accra (28 percent), Bamako (28 percent) and Cape Verde (24 percent).

 

Southern Africa (23 percent of total development pipeline) sees 963 rooms planned to enter in 2020, with South Africa - Johannesburg (71 percent) and Durban (21 percent) - seeing the predominance of activity, followed by Zambia.

 

Over the past three months, HTI Consulting has engaged in numerous discussions with hotel owners who have navigated different cycles during the pandemic, from survival (as hotels closed) to cost containment, defining hygiene safety protocols, staffing plans and ultimately, reopening strategies. 

 

“Despite pressured economic environments and tough decisions, many hotel operators have been able to successfully conclude and sign deals with owners during the lockdown period. A total of 15 new hotel deals were concluded by seven operators in eight countries, from March to June. 

“Despite current challenges and the overall uncertainty that trouble us all, there will be better times ahead and the travel market will eventually emerge stronger and more resilient. As governments slowly roll back travel restrictions and prepare to reopen society, the future winners are those that build a future based on a strong risk mitigation approach and display flexibility and innovation,” he added. 

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